International Conference on Intelligent Systems, Control & Manufacturing Technology (ICICMT2015) March 16-17, 2015 Abu Dhabi (UAE)

An Analysis of Factors Affecting Growth and

Barriers of E-Commerce in UAE
Ahmad Ghandour

in UAE, an interpretive exploratory investigation deemed

suitable. Primary and secondary data will be collected.

AbstractWhile E-Commerce offers viable solutions for

businesses trying to meet the challenges of the contemporary digital
life style, consumers in United Arab Emirates (UAE) are still cynical
of adopting it. An interpretive exploratory approach is used to shed
light on incentives and barriers facing UAE consumers when
shopping online. In particular, this study seeks to explore the factors
affecting the growth and barriers of E-Commerce in UAE. A number
of growth factors and barriers were identified and explored.

II. DEFINITION OF E-COMMERCE

E-Commerce is defined as any activity which is executed
solely through the use of internet and information technology
[1]. It is not necessary for E-Commerce organization to have
physical presence of showrooms on identifiable locations. ECommerce organizations conduct their business transactions
online and deliver goods, products and services to the
customers doorsteps. E-Commerce have gained popularity in
the recent times due to its convenience and economy.
Customers can do shopping from anywhere. They do not have
to personally travel to a shop or showroom. They can easily
and conveniently shop according to their convenient time and
place. Moreover, the customers can reach a global world
market to choose their items or services from. In this way,
people can now buy from other countries as easily as they buy
from within their own country. These advantages have helped
to boost E-Commerce in recent years.
Please submit your manuscript electronically for review as
e-mail attachments. When you submit your initial full paper
version, prepare it in two-column format, including figures and
tables.

Keywords E-commerce, barriers, UAE, uptake

I. INTRODUCTION

UAE e-commerce is a virtual trend that is fast catching on

as a chunk of population are turning to the internet to buy
and sells things using websites such as Souq.com. The reason
for such increase is due to the increased connectivity, rapid
proliferation of connected devices and services and the
governments initiatives encouraging a digital lifestyle. People,
however, seem to be cognizant of the possible benefit to be
achieved from adopting e-commerce, but they recognize that
there are significant barriers or inhibitors that influence their
adoption, and may even deter them altogether. Hence the
relative slowness in taking up opportunities offered by online
technologies.
Whilst there is much of the research addressing the ecommerce adoption in developing countries, little if none has
been conducted in UAE in relation to e-commerce uptake. In
particular, this study has the objective of exploring and
describing the current E-Commerce adoption level in UAE.
Thus, this paper seeks to investigate the factors affecting
growth and barriers of E-Commerce in UAE, focusing on the
nature and effect of factors that might either positively or
negatively influence adopting e-commerce in their shopping
practices.
A study in the UAE context is particularly important despite
the growing number of studies on the uptake of e-commerce
stemming from the need to advance the understanding of key
factors experience in different contexts around the world. UAE
has got a unique environment compared to other developing
countries.
Given the lack of empirical research in this specific context
N

III. E-COMMERCE IN UAE

The United Arab Emirates occupies the highest place among
the Middle East countries in the E-business category.
According to the annual MasterCard Online Shopping
Behaviour Survey, e-commerce activities are the highest in the
UAE with around 51% people utilising e-commerce portals to
conduct their commercial transaction. [2] reports that more
than 60% of E-Commerce conducted in the GCC is done in
UAE. Due to the high usage of internet by the people of UAE,
e-commerce is quite common and many people are turning to
this mode of shopping. On almost daily basis websites are
registered in UAE to shift their business to online mode. Many
businesses in the retail sector have now shifted to e-business. It
is estimated that in future more people will switch over to ebusiness in UAE as compared to other modes of shopping.
According to ShopGo recent workshop in Dubai, ECommerce in the UAE is booming which recorded 300%
growth between 2013 and 2014.

Ahmad Ghandour is with the Al Ain University of Science & Technology,

P O Box 112612. Abu Dhabi, UAE (Phone:
0097126133563; e-mail:
ahmad.ghandour@aau.ac.ae).
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International Conference on Intelligent Systems, Control & Manufacturing Technology (ICICMT2015) March 16-17, 2015 Abu Dhabi (UAE)

IV. METHODOLOGY

shows their expertise and engagement with IT applications. EBusiness gets advantage of this trend among UAE people
because they become user-friendly with online shopping. GPI
Report 2014 informs that more than 84 per cent of UAE online
shoppers like to discuss their purchasing decisions with their
friends or family.

A qualitative approach was employed for this study.

Primary data through interviews was collected and a secondary
data was also collected from government documents.
V. FACTORS AFFECTING GROWTH OF E-COMMERCE IN UAE

E. Range of Products
E-Business has made it easier for UAE people to compare
prices and find the best bargains. Moreover, they can buy from
international sources. Instead of depending on what is
available in local stores, UAE customers have now got a wide
range of choices due to the introduction of E-business.

A. Government Encouragement
The UAE government has always been keen on encouraging
E-business in UAE. Most of the government departments have
established their own websites with e-commerce portals. Now
many of the government transactions can be done online.
Ministry of Labour, Ministry of Immigration, Police
Department, Customs Departments, Ministry of Law, and
Ministry of Health are just a few examples which have
initiated e-commerce websites. The main purpose is to
facilitate the residents of UAE. In doing so, the governments
sector has also paved the way for increase in E-business trend
in the country. Dubai Electric and Water Authority (DEWA)
has experienced 49% of its customers using E-business modes
of payment [2]. When UAE residents have become used to
dealing with government departments through E-business, it
has become easier for them to get in touch with commercial
organizations as well.

F. Services Sector as Biggest User of E-Business in UAE

Majority of the e-commerce usage among UAE people is for
payment of utility bills, charges and fines, and other such
payments to government and non-government departments.
People find it highly convenient to make payments this way
without having to visit the utilities offices. Ashish Punjabi (),
reports that among UAE companies Emirates Airlines has the
highest ratio of E-business transactions.
G. Low Cost of E-Business
Companies conducting E-Business have low running cost.
They do not have to spend hefty amounts as overhead charges.
The success of E-business mainly depends on efficient supply
chain, inventory management, and following the fiscal
regulatory procedures. In this way starting E-Business in UAE
has become relatively easy with reduced set-up costs.

B. Promulgation of New Laws in UAE

UAE government has also promulgated new laws to ensure
that UAE people can engage in E-business in a secure and
independent environment. The Federal Law No. (1) of 2006
deals with electronic commerce and transaction. The purpose
is to provide a legal framework for all parties in UAE
engaging in E-business [3]. Due to these steps now companies
in UAE consider it safe and convenient to do business with
other companies in the world through E-business. In this
regard, Dubai Chamber of Commerce has partnered with
alibaba.com to provide the people of UAE a unique trading
experience of E-business. The umbrella of trust provided by
DCC encouraged the UAE businessmen to deal through
alibaba.com. (dubaichamber.com) [4]

H. Convenience of Payment
People do not have to carry cash with them and go to
shopping malls for their purchases. UAE people are making
use of their credit cards and online bank accounts to make
purchases. This convenience is the main driving force behind
the growth of E-business in UAE.
VI. BARRIERS IN USING E-COMMERCE IN UAE

C. Growth of Internet Usage and Mobile Phone

According to the GPI Report 2014, in UAE 5.859 people
use internet. More than 50% of these use their mobile phones
to access the internet (globalizationpartners.com) [5]. The
same report reveals that more that 68% people in UAE own
smartphones. These statistics show why E-business has such a
large potential of growth in UAE. Part of the reason why
online shopping is popular among the UAE people is that they
can share information easily with others. They can discuss and
have the opinion of others before making any purchases
through online transactions.

Despite growth of E-business in UAE there are still several

barriers which hinder its fast growth. Some of those barriers
are discussed here.
A. Lack of Trust
One of the major problems in online transaction is the high
ratio of fraud committed or reported on the internet. In spite of
all the steps taken by the government of UAE to safeguard its
peoples online transactions, there is still a lack of trust on Ebusiness. People still dont believe that it is as safe as shopping
with cash in hand.
B. Doubt about Merchants Ability
Many people believe that e-business is risky because
merchants are not always able to fulfil orders according to the
customers requirement. The delivered goods are sometimes

D. Growth of Social Media

Interaction on social media also helps to boost E-business
options. More than 52% users of internet in UAE have at some
stage, created online content (globalizationpartners.com). This
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International Conference on Intelligent Systems, Control & Manufacturing Technology (ICICMT2015) March 16-17, 2015 Abu Dhabi (UAE)

found to be different from ordered ones. The specifications,

size, colours or other variables are different from those that the
customer had ordered. UAE people often complain that it takes
a long time to get the things replaced. Therefore, E-Business is
still not the preferred mode of shopping for the majority of
people in UAE.

order to attract more customers, E-Commerce companies

should try introduce products which are environment and
culture friendly for UAE people.
3) Companies can have better E-Commerce potential through
showing cultural and social sensitivity about the UAE.
4) Business organizations should target to increase peoples
trend towards E-Commerce through more market
research.
5) E-Commerce companies should present more website
material in Arabic language for better comprehension by
customers.

C. Cash-Oriented Society
UAE is primarily a cash oriented society. People like to buy
things through visiting shops personally and paying by cash.
They can also bargain with the shopkeeper and reduce the
price of things they want to buy. Online shopping does not
offer any such advantages. In UAE people also like to use cash
so that they can know how much has been spent and on what.
In online shopping they do not get that feel of the cash flow.

REFERENCES
[1]
[2]

D. Physicality of the Purchasing Experience

People cannot have the physical feel of things that they are
buying online. People in UAE often report that they feel as if
they buying something blindly while doing online purchase. It
is only when they receive the item they realize how it is. At
that time, if they are not satisfied, they cannot change it
immediately. That is also the reason why UAE people prefer
Cash on Delivery terms of payment so that they can back out
of the purchase if they dont like the items (Punjabi).

[3]

[4]

[5]

E. UAE Demographics
Most of the UAE population lives in cities. In cities there
are all sorts of shopping malls in close vicinity to where people
live. Visiting shopping malls is also among favourite pastime
hobbies of UAE people. That is why E-business is not growing
as fast as it has the potential of growing in UAE. For people in
UAE going to a shopping mall is not a compulsion or a boring
routine. They enjoy it. Shopping in the luxurious environment
of shopping mall, with the shop assistants direct information
about the items, is an experience which has no alternative in
online shopping. Retail hours of shopping malls are according
to the publics requirement. There is a wide variety of goods in
stock at retail outlets. Therefore, people still prefer to do their
shopping manually.

Ahmad Ghandour Assistant Professor at Al Ain University delivers lecture

in MIS & E-Business. His research focus is on eCommerce value in business.

VII. CONCLUSION AND RECOMMENDATION

This study has attempted to show how E-Commerce is
popular in UAE. Several factors related to the growth of ECommerce in recent years have been discussed. The role of
UAE government and the rise of social media in influencing
people usage of E-Commerce are discussed. At the same time,
the reasons for slow growth of E-Commerce in UAE have also
been explored. In the light of this study it is recommended that
1) E-Commerce companies should try to make their website
material more culture friendly for UAE people.
2) The length of a submitted paper should be commensurate
with the importance, or appropriate to the complexity, of
the work. For example, an obvious extension of
previously published work might not be appropriate for
publication or might be adequately treated in just a few In
http://dx.doi.org/10.15242/IIE.E0315531

P. Timers, Electronic Commerce - strategies & models for business-tobusiness trading. New York: John Wiley & Sons, Ltd, 2002.
A. Lowe, UAE holds largest share of e-commerce sales in region. 24
January 2012. Gulf News. 03 April 2014. <http://m.gulfnews.com/uaeholds-largest-share-of-e-commerce-sales-in-region-1.970176>.
A. Punjabi, What Sells Online. 16 July 2012. Ashish Punjabi Blog
Spot. 03 April 2014. <http://ashishpanjabi.blogspot.com/2012/07/ecommerce-in-uae-part-1.html>.
dubaichamber.com. Dubai Chamber signs MoU with Alibaba.com to
provide easy online trading for Dubai and regional businesses. 2013.
Dubai
Chamber.
04
April
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<http://www.dubaichamber.com/en/news/dubai-chamber-launches-ecommerce-portal-for-mena-region>.
globalizationpartners.com. Website Globalization and E-Business |
United Arab Emirates. 2014. www.globalizationpartners.com. 04 April
2014.

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